What Is the Registration Statement Quiet Period ?

Companies going public by filing a registration statement on Form S-1 under the Securities Act of 1933, as amended (the “Securities Act”) are often unaware of the securities laws that apply to the “quiet period” of the Securities and Exchange Commission (“SEC”). The federal securities laws do not define the phrase “quiet period”.

The phrase “quiet period” refers to the period of time from a company’s filing of a registration statement with the SEC until the SEC’s staff declares the registration statement effective.

During the quiet period, federal securities laws limit what information a company and its agents can release to the public. The failure to comply with the SEC’s requirements is known as “gun-jumping.”

The most recent SEC modifications to the rules surrounding communications during the registration statement process under the Securities Act of 1933 (the “Securities Act”), were in 2005.

Free Writing Prospectus During The Registration Statement Process

Well-known seasoned issuers are permitted to engage at any time in oral and written communications, including use at any time of a new type of written communication called a “free writing prospectus”.

Registration statement offering participants, other than the issuer, are liable for a free writing prospectus only if they use, refer to, or participate in the planning and use of the free writing prospectus by another offering participant who uses it. Issuers filing registration statements have liability for any issuer information contained in any other offering participant’s free writing prospectus as well as any free writing prospectus they prepare, use, or refer to.

Release of Information During Registration Statement Process

All reporting issuers filing registration statements are, at any time including during the registration statement process, permitted to publish regularly released factual business information and forward-looking information about their business, operations and other matters.

Non-reporting issuers filing registration statements are, at any time, permitted to publish factual business information that is regularly released and intended for use by persons other than investors or potential investors.

Timing of Communications During Registration Statement Process

Communications by issuers more than 30 days before filing a registration statement with the SEC are permitted so long as the issuer does not reference a securities offering that is the subject of a pending registration statement.

A number of these rules concerning the quiet period include conditions of eligibility. Most, for example, are not available to blank check companies, penny stock issuers, or shell companies.